Future of Globalization

Will a Chinese “Sputnik moment” in AI Unleash Dynamism in the West?

A German perspective on the global AI race.

Takeaways


  • As AI is taking over, the portion of the economy that doesn’t fit with the old governance model linking democracy and prosperity just keeps getting larger.
  • The strong monitoring orientation built into the structure of Chinese society equips the nation very well for the AI era.
  • China has effectively let go of Deng Xiaoping’s strategy of peaceful growth in the current stage of its development path. The "One Belt, One Road" project is rooted in an explicit strategy to become the world leader in technology.
  • One can only hope that the German government understands that it is its political obligation to unleash German society’s self-renewal – and to do so during the rest of the current parliamentary term which ends in the fall of 2021.

None other than the power-savvy Vladimir Putin has declared that “…the nation that leads AI will be the ruler of the world.”

At present, five nations lead the global ranking on AI technology: China is in the top spot, followed by the United States, Japan, the UK and Germany. It was only in 2016 that China and the United States changed positions. Nonetheless, China leads with a vast distance from all its followers.

Germany, for its part, ranks 5th worldwide when it comes to research output. However, Germany ranks 7th when it comes to applications. It ranks eighth when it comes to startups. This shows that Germany consistently misses to translate inventions into applications and product innovations. Part of the reason is a culture that hesitates to take risks and instinctively dislikes disruptive moves.

It’s hard to trigger cultural change

In its “High-Tech Strategy,” the German government has long promoted collaboration between industry and science, as well as entrepreneurship itself. Its recent flagship project was the “Cutting-Edge Cluster-Competition.” However, the competition was closed, and clusters internationalized after only two funding rounds.

What has become of it? These clusters were intended to spawn Germany’s new “future industry” structure by creating new networks between key sectors. Up to now, the goal of the state’s competition has not been reached — at least not in the digital sector. Germany still lacks a globally recognizable e-commerce or AI company. The government has already been broadly criticized for not responding with new policy parameters that arise from the digital transformation of advanced economies.

New stage of industrial development

Linking IT leadership and economic prosperity has been a hallmark of the United States’s global power. In the pre-IT era, Germany was very successful in creating that linkage, beginning with the “Wirtschaftswunder” of the 1950s and 1960s.

Germany falling short on this crucial frontline of current and future prosperity is especially stunning when one considers the case of today’s China.

Meanwhile, China’s star is rising

Chinese aspirations to achieve technological leadership and economic growth are very closely connected to China’s immense hunger for data. It provides the raw material for AI technology and has the additional benefit, in the Chinese leaders’ concept of power, to be of immense use for internal and external surveillance purposes, as well as other economic and military reasons.

In many ways, China challenges long-term certainties and scientific theories of Western scholars and professionals, even though the ways with which it goes about its path are distasteful from a Western perspective.

However, the “China exception” unsettles long-held views about the linkages between economic growth and a growing innovation culture in the scientific sector.

For a long time, Western economists and scientists seemed confident that economic prosperity and an innovative culture were deeply rooted in democratic societies. Autocratic societies or dictatorships could not tap into such sources of wealth. That expectation seems to be proven false in the case of China.

Is there an “AI-Sputnik moment” coming to the West?

In the past 50 years, the Western hemisphere has been able to balance the two conflicting goals of economic growth and capitalism with the wish for democracy. The ensuing prosperity allowed for the organized distribution of earnings in an ever-growing economy, often to buffer the less well-off via the welfare state.

This development has lost its dynamism in the digital age where “the code is law” — and where no parliament must be asked to apply it.

As AI is taking over, the portion of the economy that doesn’t fit with the old governance model linking democracy and prosperity just keeps getting larger. This development has major implications for everything from data law to security policy.

China’s leaders are clearly thrilled that the order established via the Chinese social and economic system still works with the U.S.-emulated narrative that all Chinese citizens can become richer, more successful, more educated and can climb the career ladder.

This system has worked quite well for the Chinese over the past several decades. To extend this powerful form of payoff, there is widespread acceptance of the AI-backed social credit system in China among its citizens. In a way, the strong monitoring orientation built into the structure of Chinese society equips the nation very well for the AI era.

What should be closely followed from the West is that the Chinese government has effectively let go of Deng Xiaoping’s strategy of peaceful growth in the current stage of China’s development path. The “One Belt, One Road” project is rooted in an explicit strategy to become the world leader in technology.

Accordingly, the Chinese government has formulated the project’s goals in core areas. Two of them are made explicit in the “Digital Belt and Road Strategy” and in its 2017 AI strategy.

That strategy is aimed at China becoming the world leader in AI by 2030 at the latest. For that, the Chinese government not only inserted AI books into school education, but also purposefully linked the strategies of major e-commerce and IT companies to state-driven monothematic data platforms and AI hubs.

How to grow AI technologies in Europe

Given the ever-clearer challenge emanating from China, many countries that have so far failed to keep pace with the technological and political developments to manage, promote and implement AI technology are now keen to position themselves to take advantage of AI.

One after another, they have announced budgets intended to be spent on AI research and applications.

The German government, known for having difficulties with adopting cutting-edge tech developments outside its well-established industries, has held only one official AI summit at the Federal Chancellery, in May 2018. Germany is still working on drafting its AI strategy and will only begin to discuss the first details in parliament this September, after the summer break. The AI strategy will be published no earlier than December 2018.

The German government intends to trigger change with a new “Agentur für Sprunginnovationen” — an agency for disruptive (civil) innovations, for which it will spend €100 million per year — and with a second “Agency for Cyberweapons,” on which it will spend €50 million per year.

That isn’t much money for sure. But it is also true that the pathway to future prosperity does not lie in throwing money at (known) problems.

In Germany’s case, the greatest challenge also goes beyond overcoming the cultural resistance to risk-taking and the widespread wish for stability.

The pursuit of a true innovation culture also requires a far more refined understanding of data, whether in terms of access or collection. The UK, for example, has long been known for having strong privacy preferences. At the same time, the country has defined AI as an important growth sector and pursues data policies that are far less ideological than Germany’s.

It is only on that basis that true networking capabilities and true entrepreneurship can be established. Important though they are, these are qualities that have rarely been seen in Germany in several decades.

This becomes a major obstacle when the Internet “code is law” and “AI governs.” The most fundamental risk for Germany is that the country’s politicians and the population at large will worship an absolutist understanding of privacy, so as to “explain” why Germany isn’t going after AI at full bore.

Conclusion

One can only hope that the German government understands that it is its political obligation to unleash German society’s self-renewal – and to do so during the rest of the current parliamentary term which ends in the fall of 2021.

That will prove to be a significant challenge. After all, policymakers themselves are accustomed to operating in stable systems with clear boundaries. They will have to adapt to more non-linear, unordered and emergent policy settings.

The growth of an AI technology based on code and an internet governance focusing on public interest and democratic values will help conceptualizing that new space.

However, the best frameworks count for little if it doesn’t lead to real dynamism across the economy.

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About Denise Feldner

Denise Feldner is a lawyer and technology expert based in Berlin. She works in international law and analyzes the impact of digital technology on the modern state and society.

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